Islamabad (Shahbaz Rana / Daily Express Tribune / Tuesday, July 16th, 2013) – In 2006, Pakistan sold 26% shares in PTCL to Abu Dhabi-based Etisalat for $2.6 billion along with management control. Later on, the then government bowed to Etisalat’s demand of giving it 51% voting rights despite having a 26% stake.

Etisalat UAE Head Quarters

Pakistan and Etisalat – the buyer of 26% shares in Pakistan Telecommunication Company Limited (PTCL) – are running against time to resolve outstanding issues hindering the payment of $800 million to Islamabad.

Some spadework has been done by the Ministry of Finance and Privatisation Commission to settle the dispute over transfer of properties to Etisalat, in response to a 10-day deadline set by Finance Minister Ishaq Dar that ended on Monday.

In a latest twist, the National Accountability Bureau (NAB), which had started investigation recently, has suddenly become active and searched the record of the 2006 privatisation deal with Etisalat, according to PC officials. It has also issued notices to the PC officials.

NAB has recently kicked off investigation into the PTCL privatisation deal on “various accounts”, confirmed Ramzan Sajid, the spokesperson for NAB.

Sajid, however, did not disclose the nature of the investigation, but according to PC officials the probe involved both the 2006 transaction and developments afterwards.

In 2006, Pakistan sold 26% shares in PTCL to Abu Dhabi-based Etisalat for $2.6 billion along with management control. Later on, the then government bowed to Etisalat’s demand of giving it 51% voting rights despite having a 26% stake, which is now creating problems for Pakistan.

After making initial payments, Etisalat withheld six tranches totalling $788 million following a dispute over 136 properties. The government has already transferred over 3,300 properties in the name of PTCL but Etisalat is reluctant to pay $665 million on this account in violation of the understanding reached with Pakistan authorities.

The PTCL deal has become more of a sovereign deal between the two countries and less a privatisation deal, thus limiting the role of NAB, according to a government official who was involved in the transaction.

The NAB’s decision to launch investigations is seen as a blow to a plan to restart the privatisation process aimed at reducing the role of government in doing business in addition to getting rid of loss-making state enterprises. The privatisation of state-owned entities is also part of the conditions agreed with the IMF for a $5.3 to $7.3 billion bailout package.

“NAB’s decision to investigate the deal is not a good omen for privatisation in the country,” said Engineer Khurram Dastgir, Minister of State for Privatisation while talking to The Express Tribune. He said the probe was launched before the PML-N government came to power.

The investigations followed hard on the heels of a judicial investigation launched by the Sindh High Court.

Dastgir said both the sides should try to resolve their outstanding disputes at the earliest in order to forestall challenges that may arise as a result of the probe.

Finance Minister Ishaq Dar and Etisalat officials met in Islamabad 10 days ago and agreed to settle all issues. Dar is Pakistan’s point man to settle the issue amicably by using his offices.

Developments since July 5, 2013

Dar had asked the PC to submit a plan to transfer those properties that were not in litigation. Dastgir said the PC has already submitted the plan to the minister, who has given approval to paying Rs2.5 billion to the PC. The PC will forward these payments to provincial and district governments as property taxes, paving the way for transferring the properties next month.

The last PPP-led coalition government was reluctant to pick up Rs2.5 billion worth of liabilities as it wanted the PTCL to pay these dues.

In cases where fresh valuations of the properties have to be made, the PC has told Dar that the commission would be able to settle the matter in four months. There are five such properties in Punjab, three in Khyber-Pakhtunkhwa and two in Sindh.

Dirty deals

There have been cases where the government has paid the full amount to get the titles of the properties cleared but the allotments were made in someone else’s name, indicating corruption at the district level, the officials revealed. For instance, full payment has been made in Scheme 33 in Sindh but the title is in someone else’s name.

Similarly, the biggest dispute is over Gizri, Clifton Cantonment Board property, which the Karachi Metropolitan Corporation has transferred in the names of illegal occupants during General Musharraf era, said the officials. Etisalat claims that the value of this property is equal to $800 million that Pakistan is demanding in outstanding tranches.